What should I assume is a conservative premium on hard costs on building condo product over rental? I would think the big driver here would be costs associated with higher interior finish costs + common area/amenity space. I know there is a ton of variability but just for reference. 20%?
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In the context of NYC construction costs, particularly when comparing rental versus condo products, it's indeed accurate to assume that condos generally incur higher hard costs due to the need for higher-end finishes and more extensive common areas and amenities. While there's significant variability depending on the specific project and location, a conservative estimate of a 20% premium on hard costs for condo developments over rental properties is a reasonable starting point. This premium accounts for the upscale interior finishes typically required in condos, as well as the enhanced amenity spaces that are often a selling point for these types of properties.
Sources: NYC Luxury Condos, Q&A:New Real Estate Development Shop, Real Estate Trends (All Asset Types), Q&A:New Real Estate Development Shop, Yield on Development Costs
Generally have underwritten $450-$550 PSF for HC for multi and $700-$800 PSF for well located condos in NYC. Condos can move around a lot more tho.
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